In the fourth quarter of 2023, the growth of the U.S. economy slightly fell short of pre-report forecasts, with real Gross Domestic Product (GDP) expanding at an annual rate of 3.2%. This figure, according to the Bureau of Economic Analysis' second estimate, is slightly lower than the expected 3.3% rise. This growth signifies a deceleration from the 4.9% increase observed in the preceding third quarter.
Key drivers behind this quarter's GDP growth included strong consumer spending, increased exports, and elevated spending by state and local governments. Moreover, both residential and nonresidential fixed investments exhibited positive trends. However, a significant decline in private inventory investment offset some of these gains.
The composition of GDP this quarter revealed notable shifts. The decline in private inventory investment, along with a slowdown in federal government spending, residential fixed investment, and consumer spending compared to the third quarter, contributed to the overall GDP deceleration. The second estimate also indicated upward adjustments in consumer and government spending.
In terms of current dollars, GDP rose by 4.9% or $334.5 billion in the fourth quarter, reaching $27.94 trillion. Trends in personal income also demonstrated interesting dynamics, with a significant increase in disposable personal income, albeit slightly revised downward from previous estimates.
Given the robust GDP growth rate nearing expectations, coupled with the upward trajectory in consumer spending and government expenditure, the short-term outlook for the U.S. market appears moderately optimistic. The economy's resilience, despite a slowdown in private inventory investment, suggests underlying strength. However, traders should carefully monitor forthcoming economic data for more definitive indications of sustained growth momentum.
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